Danny Gabay, Fathom director, lambasted both Tories and Labour for arguing over the issue. “It’s not even rearranging deckchairs on the Titanic – £6bn is utterly irrelevant,” he said … “[Labour] is scaremongering over an irrelevance and [the Tories] are claiming large benefits over an irrelevance,” he said.
The things the parties would like to shout about – like Save our Tax Credits! from Labour – don’t always resonate, or have much solid meaning (see ‘Big Society’, passim). Yet there are huge decisions to be taken because of sheer fiscal necessity. Nicholas Timmins, public policy guru at the FT, has a long analysis piece on the welfare state, all £413bn of it, with this extraordinary fact:
The size of the task is illustrated by the fact that even if it were practically possible, let alone politically, to axe overnight all Labour’s additional entitlements – the bus passes, baby bonds, education maintenance allowances, Sure Start centres and the like – the total saving would be less than £10bn a year.
For those thinking the answer is privatisation, there is this thought:
[Professor Glenerster] recently calculated the cost of replacing state education, health and pensions for a family with two teenagers, using private payment and insurance. The cost came out at more than half the income of an average family – “and that is assuming they are in good health. If they are not, the costs would be catastrophic,” he says. “Private insurance cannot pool risks over the whole population, so the costs are inevitably higher than the taxes the family pays at present.”
The costs of things like Winter Fuel payments are undebated in this election. There are 13m over 60s. £250 per year then equals £3bn a year. Yet according to David Willetts* the people getting this £250 and for the next few years are uniquely privileged, and living off the worse-luck of the younger. Those born in that era enjoyed defined benefits pensions; rising house prices, yet with mortgages wiped away by inflation; favourable demographic ratios. And yet we transfer £3bn a year to them?
Absence of debate about the fiscally-crunchy issues is the nagging sub-theme for wonks talking about the election. Instead of judging their plans, we are asked to reward parties for their ‘instincts’: look at the FT’s incredibly lukewarm endorsement of the Conservatives**:
This leaves the Conservatives. They are not a perfect fit, but their instincts are sound. Their fiscal plans, while vague, suggest they would do most to reduce the size of the state – cutting more and taxing less than their opponent
We are left watching a party rewarded by the most financially astute (and consistently liberal) newspaper in the land, for …. having plans that ‘suggest’ the right action, and ‘sound instincts’. Despite making a monumental fuss about something that might deliver 0.03% extra growth, they get credit for ferociously difficult actions that they have somehow not spelled out in any detail. Not a great day for the idea of media scrutiny.
*possibly my favourite Tory
**[Yet again, a newspaper shows concern at what the FT calls “an uneasy mix of sanctimony and populism” in LibDem economic policy. This is worth noting.]